A New Kind of High: Cannabis Coworking Spaces

Jessica VerSteeg modeled professionally for 10 years before going on to become the CEO of her own cannabis blockchain company. She has over 300,000 followers on Instagram and once appeared on the Amazing Race as a contestant. JESSICA VERSTEEG

It’s 2018, and the smoke is clearing out of the way for Jessica VerSteeg. The 30-year-old Dutch-Puerto Rican model and former Miss Iowa beauty queen (as well as one-time Amazing Race contestant) also happens to be the CEO of Paragon, a first-in-class blockchain platform built for the cannabis industry.

Paragon offers everything from a cryptocurrency (ParagonCoin, traded as PRG) to a blockchain solution (ParagonChain) designed to expedite and digitize the marijuana supply chain. For a burgeoning industry that is still fighting for legalization while drowning in an analog cash-based economy, Paragon promises information security for consumers and safe, quick transactions for sellers. Now, VerSteeg’s latest venture is Paragon Space, Los Angeles’ first cannabis co-working space set to open on September 1.

Feel a bit like worlds colliding? VerSteeg chuckles wryly when asked to connect the dots between what seems like two disparate chapters of her life: the lingerie model and the crypto businesswoman. “This is always the question that everyone asks.”

And there is a compelling answer. VerSteeg dropped out of college and worked as a professional lingerie and fashion model for ten years before a life-shattering event caused her to do a complete 180 into cannabis entrepreneurship.

From Tragedy to Technology

VerSteeg founded her first company, a luxury marijuana subscription service, in 2014, before going on to create Paragon. RAJ HARDWAJ PHOTOGRAPHY

In 2013, VerSteeg was dating Tyler Sash, a breakout NFL player struggling to deal with pain from his football injuries. When he was let go by the New York Giants after suffering too many concussions, he no longer had access to his normal dose of painkillers, she said, and turned to pills to cope.

“While we were together, he would ask, ‘Jess, can I smoke weed for my pain?’” Versteeg said. “I didn’t understand marijuana at that time, and I said ‘No, it’s not legal here. I trust the NFL doctors, they know what they’re doing.’ Little did I know, they didn’t know what they were doing.”

VerSteeg thought it was dementia when her boyfriend “became a different person” and started to “do crazy things.” She begged the NFL to help, but it didn’t do anything. He became addicted to opioids and she had to end the relationship.

A year later, he died of an overdose.

Devastated, VerSteeg said she spiraled into a suicidal depression, consumed by guilt that she hadn’t listened to her partner more seriously about the uses of medical marijuana. She credited her mother for noticing the dark place she was in and helping her turn her pain into an outlet for entrepreneurship and technology.

A New Joint Venture

In 2014, VerSteeg founded her first startup, AuBox, a luxury marijuana subscription service that delivered products like weed-infused cake pops, CBD bath bombs, and supplements discreetly to customers’ doorsteps. The blockchain technology she developed alongside AuBox, which she dubbed AuChain, then transitioned into an idea for Paragon, a cryptocurrency and blockchain offering designed specifically for the cannabis world.

“I don’t think that’s unrealistic, given that we’re already at 30, and there’s several states that have bills on the table to legalize,” Karnes said. “Once this next wave of states occurs, it’s just going to accelerate the timeline for other states.”

Given that the current administration hasn’t cracked down on weed on the federal level two years in, Karnes said that it was unlikely that there would be massive legal problems on the horizon for the industry. And because Paragon doesn’t deal with the physical product of marijuana itself—rather, it’s just a cannabis-related technology—it isn’t breaking the law.

VerSteeg herself was an early investor in Bitcoin since 2010 and is obsessed with crypto, choosing to do as much of her grocery shopping and dining at crypto-friendly establishments as she can. When she was raising capital for ParagonCoin, she chose to do an ICO (Initial Coin Offering) rather than go to VC firms, which she found difficult to break into as a female entrepreneur.

Weed and blockchain, perhaps a little like VerSteeg’s past and present, are an unexpected pairing that quickly starts to make a lot of business sense upon deeper consideration. Cannabis is a rapidly growing industry, with more and more investors jumping onboard as the world’s first weed-based ETF has attracted nearly $400 millionsince December. It is also an industry ripe for technological disruption, considering its current dependency on cash.

Because federally-insured banks cannot transact with cannabis-related businesses, most companies deal completely in cash, which slows down operations and poses serious security risks. Meanwhile, due to lack of federal consumer oversight, buyers are susceptible to falsified or impure products, with no real idea of where or how the weed they’re consuming was grown.

Blockchain could solve all of that. The technology, which essentially acts as a decentralized ledger, introduces incredible transparency and efficiency into the marijuana supply chain process by providing information on a product’s origination, farming data, lab results, and ingredients, all impervious to fabrication.

“Over time, I realized it could actually be something beneficial for the cannabis industry,” VerSteeg said. Now, at Paragon, she is working on everything from cryptocurrency to blockchain solutions, digital wallets to a mobile app that can scan QR codes on Paragon-friendly products to reveal a wealth of product data.

The Cannabis Coworking Vertical

As if starting two companies before the age of 30 wasn’t enough, there is one final challenge that Jessica VerSteeg is trying to solve at the junction of cannabis and technology: affordable cannabis co-working spaces.

Over the years with creating her two startups, Versteeg discovered how hard it was to find a suitable office space due to landlords skittish about the legal ambiguity of her industry. Competitive co-working companies like WeWork were not always amicable to their clients bringing in pre-rolls or CBD products on premises to observe or demonstrate, and many normal office spaces were uninhabitable due to Green Zone regulations that prevented weed-related businesses from being located too close to, say, a daycare.

“When I had AuBox, it was really difficult to find an office space in the neighborhood that wouldn’t charge me ten times more just because they found out I was some form of a cannabis company,” she said.

Enter Paragon Space, a four-building campus for cannabis co-working, set to open in Hollywood, Los Angeles in a month. Companies will be able to rent private and shared office spaces with access to conference rooms, outdoor spaces, a cafe and common areas. A hot desk membership is priced at $449 a month, a four-person company desk at $1,996 per month, and a three-person private office space for $2,070 a month.

Mock-ups of the inside of Paragon Space, which will include community areas, a cafe, outdoors space, office kitchens, and flexible co-working spaces. PARAGON

Interest is high and clients have already signed up to move into the space, according to VerSteeg. As for the legality, Paragon Space isn’t in danger, since it is dealing just in the technology and co-working space.

Mock-ups of the inside of Paragon Space, which will include community areas, a cafe, outdoors space, office kitchens, and flexible co-working spaces. PARAGON

“If you’re not touching a plant and not doing anything that’s physically related to marijuana, I don’t think that should pose any legal problems,” Karnes of GreenWave Advisors said. “It shouldn’t really be different from any other business.”

Green Helix, a West Hollywood-based start-up that sells CBD-infused products, is one of the companies that will be leasing from Paragon Space. When Nick Palacios, director of product and development at Green Helix, met VerSteeg and heard about the space, he was instantly intrigued.

Green Helix will be moving into Paragon Space when it opens next month. As a young hemp-based company, Palacios said the team would benefit immensely from being in a co-working space with others in the same vertical without having to worry about judgment or bias.